India has come up as one of the world’s most AI-optimistic cybersecurity markets, while at the same time recording higher number of cyberattacks than the global average, according to a recent report by Zoho.

The report titled, ‘State of Workforce Password Security 2026’ found that nearly half of Indian organizations surveyed experienced cyberattacks over the past year, the highest among the major regions studied and above the global average of 32%.

At the same time, 90% firms said they believe artificial intelligence will strengthen cybersecurity, making the country the most optimistic market globally for AI-led security adoption. The contrast, analysts say highlights a paradox- companies are racing to adopt AI tools and expand digital operations, despite lacking the basic cybersecurity architecture needed to defend against modern threats.

The study noted that a large majority of Indian organizations plan to increase cybersecurity spending over the coming years. Yet more than two-thirds still do not have a Zero Trust security framework in place, a model widely considered essential for protecting enterprise systems in hybrid and cloud-driven work environments.

Researchers said that digital transformation has dramatically expanded the attack surface for businesses. Employees routinely work across multiple cloud applications, collaboration platforms and enterprise tools, creating a sprawling web of passwords, identities and access permissions that organizations often struggle to manage effectively.

An integral structural challenge identified in the study was the shortage of cybersecurity talent. The report estimated 3.5 million global cybersecurity vacancies through 2026, while 38% of firms cited lack of internal expertise as the biggest barrier to AI adoption in security. More than half of small and medium businesses surveyed said they did not have dedicated security teams.

In addition, around 30% of organizations work with six or more security vendors, creating operational complexity and visibility gaps. Researchers said disconnected systems often leave orphaned accounts, undocumented access and inconsistent enforcement of security policies.

Despite the challenges, cybersecurity spending is expected to rise, with 72% of organizations planning to increase security budgets in 2026. Companies are expected to focus investments on centralized password management, multi-factor authentication, integrated identity governance and AI-powered threat detection tools.

“Budget is not the primary constraint on security maturity; architecture, talent, and visibility infrastructure are,” Helen Yu, Founder and CEO of Tigon Advisory Corp., said in the report.